Expected Value of Lottery Ticket
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You are considering paying $5 to buy a ticket in a local lottery. You were told that 10,000 tickets will be sold. There are 5 prizes. The first prize is $5,000, the second is $1,000, the third is $500, the fourth is $100 and the last prize is $10.
Compute the expected value from the payoff.
a) $0.661
b) $1.20
c) $5.00
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